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Under pressure from industry, EPA drops an investigation despite evidence that a Texas company’s fracking activities could have contaminated residential wells.

The Supreme Court heard oral argument in Koontz v. St. Johns River Water Management District. See useful commentary here, here, and here,

New York Times decided to close its environment desk, founded in 2009. Only about a dozen reporters at the top 5 US newspapers have environmental issues as their primary focus.

PM 2.5 levels in Beijing exceeded 700 μg/m3 in many parts of the city (EPA’s 24-hour standard is 35 μg/m3). The Atlantic compares air pollution in Beijing with that of Pittsburg a century ago (complete with some terrific historical photos), and points out that several decades passed before the political will developed to address it.

A new study shows that black carbon -- emitted by diesel engines and some wood and coal combustion -- is the second most important individual climate-warming agent after carbon dioxide. A good infographic about black carbon is available here at Climate Progress.

On Friday, Judge Ralph Beistline
(U.S. District Court, Alaska) released an order setting aside the Fish and
Wildlife Service’s critical habitat designation for the polar bear. This is a pretty big deal. The polar bear designation was the most
extensive in ESA history, and also one of the most controversial.

Despite the outcome, most of
Judge Beistline’s opinion is devoted to rejecting the arguments a coalition of
plaintiffs had raised against the designation.
In my opinion, all of the opinion should have been devoted to that
purpose. On the issues where the
plaintiffs prevailed, there are key elements of the court’s reasoning that I find
a little difficult to understand.

Evidence Supporting the
Designation. The court’s first
reason for setting the designation aside was a finding that FWS failed to
comply with 16 U.S.C. section 1532(5)(a)(1).
That section defines critical habitat as “the specific areas within the
geographical area occupied by the species… on which are found those physical or
biological features (I) essential to the conservation of the species and (II)
which may require special management considerations or protection.” In ESA shorthand, those physical or
biological features are referred to as “primary constituent elements,” or
PCEs. Judge Beistline’s conclusion was that FWS
had failed to demonstrate that the requisite PCEs were present in all the areas
designated. That conclusion covered habitat
unit 2, which contained terrestrial denning habitat, and unit 3, which
contained offshore barrier islands.

On denning habitat, the
court’s reasoning contains a highly questionable step.
The four PCEs listed were suitable den sites, access to the coast,
access from the coast to sea ice, and locations with a minimum of human
interference. The court conceded that
FWS had demonstrated, based on a USGS study showing locations of polar bear
dens, the presence of many denning sites. But
it concluded that such sites only occupied a small percentage of the designated
area, and therefore were not, on their own, a sufficient basis for designating
the entirety of unit 2. And it found
that “evidence is entirely
lacking in support for the second and fourth features outlined by the
Service”—specifically, access routes from the coast to the den sites and areas
relatively free of human activity. With respect to PCE 2, this conclusion seems odd. The denning sites themselves provide
compelling evidence that the area allows access to the coast, for polar bears
are marine animals, and they had to get to their dens somehow. And unless their access route involved
surreptitious airlifts, they had to get to their dens by passing through unit 2.

On the third key feature, the court’s reasoning is equally
puzzling. Here’s the crux of it:

Even the support for the third feature is tenuous and in
need of clarification: “The common feature[] in many of the dens in these areas w[as] the presence of sea ice
within 16 km (10 mi) of the coast . . . .” The Service and the record fail to explain which dens are within ten miles of the coast and how close to the coast are the dens not within ten miles.

(Footnote omitted; emphasis in original) What, exactly, does the alleged gap in
explanation have to do with the PCE in question? FWS’s point was for an area to be suitable
for polar bear denning, polar bears have to be able to get to sea ice without swimming
too far from the coast. It did not say
the dens had to be within ten miles of the coast. So the allegedly missing evidence was
irrelevant to the question at issue.

The court then turned to barrier islands, and here as well the
reasoning is confusing.
Again, the court’s primary objection was that the services did not
provide enough specificity when designating habitat.
“The Service does not explain,” the court wrote, “where on the islands
and associated spits the polar bears move to access den sites and preferred
feeding habits.” That demand might make
sense if polar bears had narrow ranges.
But they don’t; polar bears are remarkable travelers and barrier islands
are hardly ever all that big.

(This,
of course, is not a problem unique to polar bears, though it is particularly salient with them. Potentially regulated entities would always
prefer small and precise critical habitat designations, but for species that travel long distances (think
salmon) and have a tendency to wander, small designations make no biological sense,
and the services do not have sufficient time or information for fine-grained
precision.)

Responding to Alaska. The court’s final objection also seems a bit bizarre. According to the court, FWS
failed to comply with ESA section 1533(i), which requires that FWS send a
written response to a state agency when FWS issues a regulation inconsistent
with that state agency’s comments or petition.
Here, FWS clearly did provide written comments responding to the state
of Alaska, but it made (according to the court) two mistakes: it sent the
letter to the governor, not the Alaska Department of Fish and Game, which had
sent the comments, and it included some of its responsive points in the final
rulemaking document rather than the letter.

The former error, to be fair, might represent non-compliance
with the literal language of the rule.
But the notion that somehow ADF&G wouldn’t have found out about the
letter to Governor Parnell—both were actively involved in lobbying FWS—is just
plain silly. If ever there were a case
of harmless error, this would be it. And
the latter argument finds no traction anywhere in the statutory text. The entire statutory section in question says
the following (and the regulations just parrot the statute):

If, in the case of any
regulation proposed by the Secretary under the authority of this section, a
State agency to which notice thereof was given in accordance with subsection
(b)(5)(A)(ii) of this section files comments disagreeing with all or part of
the proposed regulation, and the Secretary issues a final regulation which is
in conflict with such comments, or if the Secretary fails to adopt a regulation
pursuant to an action petitioned by a State agency under subsection (b)(3) of
this section, the Secretary shall submit to the State agency a written
justification for his failure to adopt regulations consistent with the agency's
comments or petition.

Final rules are
written. The court did not dispute FWS’s
claim that the final rulemaking document contained a response to Alaska’s
objections. So where exactly is the
violation? Perhaps it is the failure to
submit that justification to the state directly, but that, again, seems like a
prime candidate for a harmless error argument.
Alaska’s lawyers surely were poring over every line of that final rule,
and the suggestion that they were somehow harmed by the failure to respond to
their every objection in a separate letter again is hard to credit. In the court’s view, there seems to have been
something wrong with providing that response concurrently with the final rule, rather than after, but again
neither the statutory language nor common sense provides any basis for drawing
that distinction.

So why reach these conclusions? And why leap from these conclusions to
setting aside the entire critical habitat designation (not just units 2 and
3, but also unit 1, which includes sea ice and which is much larger than units 2 and 3)? The court’s closing words contain a
clue:

In its current form, the critical habitat designation
presents a disconnect between the twin goals of protecting a cherished resource
and allowing for growth and much needed economic development. The current
designation went too far and was too extensive.

Consider, for a moment,
the second sentence. To this point, all
the court had purported to find was that the agency hadn’t adequately supported
its designation and hadn’t followed the correct procedure. The proper closing statement, if those
conclusions were correct, would be that the agency needs to reconsider the
evidence, and perhaps also gather additional evidence, and make a new decision, not that it needs to designate a smaller
area. In demanding that smaller
designation, the court usurped the agency role.
But perhaps, if that statement captures the court’s core concern with
the designation, usurping the agency’s authority was what the court working toward
all along, and its more specific holdings were just means to that end.

When, in the middle of just the second sentence uttered by Petitioner’s counsel, Justice Ginsburg interjected “Let’s back up…,” the parties must have known they were in for a long hour of oral argument before the U.S. Supreme Court yesterday in the takings case of Koontz v. St. John’s River Water Management District.

Two decades ago, in the matters of Nollan and Dolan, the U.S. Supreme Court declared that the government bears the burden of proving that a demand for a permanent public easement that is attached as a condition of a discretionarily-issued development permit (i.e., a permit “exaction”) bears an “essential nexus” to and is in “rough proportionality” with the adverse public impacts associated with the applied-for development to avoid having to pay compensation under the Federal Constitution’s Takings Clause.

In most other takings contexts, the government currently is not subject to such heightened scrutiny; instead, the plaintiff bears the burden of proof in accord with an ad hoc, context-based analysis discussed in the Court’s 1978 decision in Penn Central. As discussed in multiple posts on this blog in the past, Koontz raises two important questions regarding potential expansion of the heightened scrutiny of Nollan and Dolan:

whether such heightened scrutiny applies to exactions that the government proposes but the landowner refuses, such that the government denies the permit application outright; and

whether such heightened scrutiny applies to permit conditions beyond those that require public occupation of private lands (such as demands for conservation restrictions or the expenditure of money for mitigating measures).

At oral argument, the first issue almost completely overshadowed the second. According to the unofficial transcript, the Justices—lead by Justices Ginsburg, Sotomayor, Breyer, and, somewhat surprisingly given his pro-property-rights stance in many prior takings cases, Scalia—peppered the landowner’s attorney, Paul Beard of the Pacific Legal Foundation, with questions regarding how his client conceivably could maintain an exaction takings claim when the water district never ultimately exacted anything. Echoing a puzzling assertion made in Petitioner’s reply brief, Mr. Beard’s responses seemed to concede that his client did not have a federal takings claim for which he was entitled to compensation, but that, instead, his client held a state statutory right to payment because the water district proposed an “unconstitutional condition” under Nollan and Dolan.

Chief Justice Roberts and Justice Alito dominated the questioning of the water district’s counsel, Paul Wolfson, and appeared exacerbated by Mr. Wolfson’s argument that the property owner must accept a conditional permit to be able to challenge the condition as violative of Nollan and Dolan.

Several things stood out at yesterday’s argument. I will mention four here.

First, the argument predictably exposed deep disagreement among the Justices regarding the applicability of the Penn Central framework in permitting cases. What is interesting, however, is that, with respect to Penn Central, Justice Breyer’s position might be considered to result in more successful takings claims than that of Justice Scalia. Justice Breyer suggested that the denial of a permit following a landowner’s refusal to accede to a permit condition that is not imposed on “anybody else” and “bears no relation” to the development could amount to a taking under Penn Central. Justice Scalia, however, intimated that such a condition is not relevant to a Penn Central claim, for a Penn Central claim can only succeed if the denial of a permit for some legitimate reason (here, protecting wetlands) results in a near total diminution in the value of the claimant’s property. Regardless of this disagreement, though, both of these Justices expressed skepticism with the Petitioner’s allegation that Nollan and Dolan apply to conditions that are proposed but never issued because the permit is denied.

Second, several members of the Court posed outlandishly demanding hypothetical development permit conditions (e.g., permits conditioned on the applicant paying “one million dollars,” “building a football stadium,” or handing over “the moon”). Yet these hypotheticals came off as so far removed from the facts of this case and, more generally, the day-to-day workings of modern permitting programs that their import moving forward lies in some doubt. On the agreed-upon Koontz facts, the landowner admitted that the wetlands destruction that would result from his development would need to be mitigated under Florida law, yet he rejected half-a-dozen mitigation options offered by the water district and failed to pose any alternatives of his own beyond agreeing not to fill the wetlands that he did not ask for permission to fill. As Justice Sotomayor remarked, “From the record it’s very clear that a conservation offer is not considered mitigation because there’s still a net loss of wetlands.”

Perhaps more importantly, though, these rather bizarre hypotheticals served to draw a distinction between viewing the Takings Clause as affording (a) some type of a punitive damage remedy for extortionate government conduct, and (b) as the Court unanimously concluded in the 2005 Lingle case, just compensation for what otherwise is a perfectly proper regulatory act.

Third, the United States appeared as amicus curia in support of the water district. However, Deputy Solicitor General Edwin Kneedler seemed to offer a significant concession to the landowner. Mr. Kneedler suggested that a proposed exaction would trigger Nollan and Dolan scrutiny if the permit denial explicitly mentions the applicant’s refusal of that condition as a justification for the denial. Even if the denial did explicitly mention the applicant’s refusal of one
particular condition (the parties disputed this fact,
opening the door to the possibility—however unlikely—that the case will
be dismissed as improvidently granted), the water district likely would disagree that anything was taken. It would seem that in such an instance the denial occurred not because of the refusal of that proposed condition but rather because of the wetland impacts of the proposed development.

Fourth, as I advocated on this blog on Monday, at least several Justices took a significant step back from the assertion in the Court’s unanimous December 2012 decision in Arkansas Game that “the sky [will] not fall” on government regulators with continued expansion of takings protections. For instance, Justice Sotomayor noted, “I see an enormous flood gate here [if we conclude that proposed exactions are subject to Nollan and Dolan scrutiny], … in which we [would be] sending a signal that perhaps States should be more quiet than engaging.”

***

On the whole, I see the day as a moderate victory for the water district, particularly in light of Justice Scalia’s apparent aversion to the landowner’s position. But while Lyle Denniston at SCOTUSblog found the argument heavily tilted in the water district’s favor, I am more cautious about whether the argument sheds great light on how the Court ultimately will decide the case. Justices Ginsburg and Sotomayor came across as the most sympathetic to the water district’s position, while Chief Justice Roberts and Justice Alito seem most likely to align with the landowner. Yet Justice Thomas characteristically did not ask any questions, and the other Justices’ questioning did not in my estimation definitively tip their hands.

On the first issue before the Court, the argument offered the possibility of a highly fractured decision, not only for the reasons discussed above but also because several Justices seemed open to reviewing the type of government action posed here under the Equal Protection or Due Process Clauses, as opposed to the Takings Clause. If the government prevails on the first issue, it is not evident that the Court even will reach the second, which, as noted at the top of this post, received scant attention at the argument.

The only thing that seems absolutely clear from yesterday’s oral argument in Koontz is that both property rights advocates and proponents of reasonable land use regulation will be on the edge of their seats awaiting the release of the Court’s decision this spring. A decision is expected by June. Please stay tuned to the Environmental Law Professors Blog for updates and analysis on this important takings case.

The Obama administration again managed to include some important incentives for renewable energy and energy efficiency in a law that was aimed primarily at averting economic crisis. As you may recall, the American Recovery and Reinvestment Act of 2009 (ARRA, aka the Stimulus Act) provided $90 billion worth in grants, tax incentives, and loan guarantees, for renewables, efficiency and related research. As I've remarked, I think it was a pretty good showing in a very unsupportive political and economic environment.

And the American Taxpayer Relief Act of 2012 (ATRA, aka the law that averted the fiscal cliff) continues this success. Section 407 extended the Production Tax Credit (PTC) for one year, through December 31, 2013. The PTC provides a ten-year tax credit of 2.2 cents per kilowatt-hour for electricity produced and sold by wind, closed-loop biomass and geothermal energy installations. It provides an incentive of half that amount for open-loop biomass, landfill gas, municipal solid waste, qualified hydroelectric, and marine and hydrokinetic technologies. Also, this new date is friendlier to producers because it is now the deadline by which construction has to begin rather than the deadline by which it has to be “placed in service.” Some of the other notable “energy tax extenders” in the new law include:• Sec. 401. Extension of credit for energy-efficient existing homes.• Sec. 402. Extension of credit for alternative fuel vehicle refueling property.• Sec. 403. Extension of credit for 2- or 3-wheeled plug-in electric vehicles.• Sec. 405. Extension of incentives for biodiesel and renewable diesel.• Sec. 408. Extension of credit for energy-efficient new homes.• Sec. 409. Extension of credit for energy-efficient appliances.

The new law’s extension of the PTC was a particularly significant achievement because the PTC has been vital to wind energy investment and was in the crosshairs of Republicans just a few short months ago. The figure below shows how critical the PTC is to wind energy investment (source: LBL, 2011 Wind Technologies Market Report, p.3). Go ahead and guess which years the PTC wasn’t available because it had expired (answer: 2000, 2002 and 2004). With the threatened expiration of the PTC, 2012 looks to have been a good year for wind energy. As of September, 4.7 GW had been installed in 2012, and another 8.4 GW were under construction (source: American Wind Energy Association, Industry Statistics).

The U.S. Supreme Court is scheduled to hear oral argument in the exaction takings case of Koontz v. St. John’s River Water Management District this Tuesday, January 15, 2013. Koontz raises two important questions: first, whether the Nollan/Dolan “nexus” and “proportionality” tests apply to exactions beyond those that require public occupation of private lands; and, second—and more significantly—whether those tests are applicable at the point in time when an exaction is merely proposed. I outlined these issues in an earlier post here, and the Koontz briefs are available here. In this post, I will set out several rather peculiar passages in the Court’s first takings opinion of the current term, the 8-0 decision in Arkansas Game & Fish Commission v. U.S., and suggest that at least some of these passages could prove influential in Koontz and that all of them could affect the development of takings jurisprudence more generally moving forward.

***

The holding in Arkansas Game is on its face a narrow one: the Justices unanimously agreed only that recurrent flooding over a temporary period resulting from the government’s operation of a dam is not categorically immune from takings liability. However, dictum throughout the opinion may leave some scratching their heads.

First, the Arkansas Game Court in several instances spoke as if the government’s motivations always have played an obvious and primary role in adjudicating regulatory takings disputes. However, one could argue that the role of governmental motivations is not as clear as the Court makes it out to be. In a recent article, noted takings expert Robert Meltz identifies a series of lower court cases debating whether and in what instances takings should be considered strict liability offenses. Allegations surrounding the Water Management District’s motivations figure prominently in the takings claim at issue in Koontz. It remains to be seen whether the Koontz Court will offer a more thorough assessment of the role of governmental motivations in takings analyses than that set out in Arkansas Game.

Second, in refusing to acknowledge an exception to takings liability for temporary flooding, the Arkansas Game Court excused a “passing reference to permanence” in one of its earlier opinions because of the “time factor” — the Court explained that the earlier matter “was decided… in 1924, well before the World War II-era cases and First English, in which the Court first homed in on the matter of compensation for temporary takings.”

In its modern takings jurisprudence, the Court has not always so swiftly brushed aside its old cases because of the very fact that those cases were decided in a bygone era—say, an era well before the Court homed in on the public’s interest in preserving the environment. In this sense, one theoretically could read Arkansas Game as having implicitly opened the door to a revisionist interpretation of the Takings Clause akin to the re-interpretation of the Due Process Clause that occurred in the post-Lochner era. As I have argued elsewhere, Nollan and Dolan in at least some instances require scrutinizing the means and ends of a regulatory decision well beyond the traditional deference afforded to such acts under modern substantive due process jurisprudence. However unlikely, it is at least within the realm of possibility that at least some members of the Court, in the course of reviewing the Koontz case, will reconsider the appropriateness of maintaining any place for the Nollan and Dolan tests within the larger picture of takings law.

Third, the Arkansas Game Court restated that Penn Central’s “situation-specific” inquiry is the driving force in most regulatory takings cases. However, it discussed what have become known as the Penn Central “factors” in a slightly different way than it has in the past. In Penn Central, the Court noted the importance of considering: (1) “the economic impact of the regulation on the claimant;” (2) “the degree to which the regulation has interfered with distinct investment-backed expectations;” and (3) the “character of the governmental action.” Arkansas Game seemingly elicited not three but five factors, only the first of which— (1) investment-backed expectations —directly mirrors a factor noted in Penn Central. The other factors mentioned in Arkansas Game include: (2) the “severity of the interference” (where a parenthetical pointed not to the economic interference but rather the repetitive nature of the government action); (3) the “degree to which the invasion is intended or is the foreseeable result of authorized government action” (a factor related to the “motivations” issue discussed above); (4) the duration of the regulatory restriction; and (5) “the character of the land at issue.”

While “factors” (2) through (5) arguably reflect principles mentioned in prior takings cases, they had not been stated in these terms or in such a systematic manner until Arkansas Game. Of these factors, the development of the “character of the land” factor may be particularly interesting to watch. If the denial of the permit application in Koontz is subject to a Penn Central (as opposed to a Nollan/Dolan) analysis, this “character of the land” factor could pose a new, difficult hurdle for the takings claimant on top of the existing hurdles that landowners ordinarily face in Penn Central cases. Nearly Koontz’s entire property is considered wetlands, which lie within the Riparian Habitat Protection Zone of the Econlockhatchee River Hydrologic Basin. The Florida legislature designated this “zone” to protect the “abundance, food sources, or habitat of aquatic or wetland dependent species.”

Fourth, the Arkansas Game Court declared itself “not equipped to address” the seemingly foundational question of whether the Arkansas Game & Fish Commission possesses an interest in a certain water flow that, in accord with Arkansas law, should be considered “property” for constitutional takings purposes. It will be interesting to see how the Court addresses this threshold question in Koontz, for where a proposed exaction is refused or withdrawn, it is not clear what interest has been “taken” from the applicant that can be protected by the Takings Clause.

Fifth, the Arkansas Game Court chastised the federal government for espousing “the prophecy that recognizing a just compensation claim would unduly impede the government’s ability to act in the public interest.” Rejecting a position staked most prominently by Justice Blackmun in prior takings cases, the Court asserted that “the sky [will] not fall” if governmental entities are exposed to temporary-flooding takings claims. It is not evident how high a bar the Court has set with this “sky falling” test. Regardless, it seems the Court significantly understated the impact of its takings jurisprudence on the efforts of government officials charged with protecting the public health, safety, and the environment through the regulation of land uses.

In Koontz, an amicus brief filed on behalf of the National Governors Association, et al., in support of the Water Management District stresses this point with particular vigor from the perspective of local governments. Noting the inability to obtain takings insurance, the difficulty for general local counsel (let alone experienced takings litigators) to accurately predict how takings cases will be decided, and the fact that even immediate repeal of a regulation following an adverse judgment can leave a community liable for multi-million-dollar temporary takings payments, the brief explains that “[a]n actual takings award, even for a mere temporary taking, can come close to bankrupting a small town and imposes burdensome costs on all but the very largest jurisdictions.” It is conceivable that such sentiments may prompt the Koontz Court to revisit and heed Justice Blackmun’s guidance on the great chilling effect that continued expansion of takings doctrine can produce.

Please stay tuned to the Environmental Law Professors Blog for updates as Koontz heads to the U.S. Supreme Court for oral argument this Tuesday, January 15, 2013.